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Growing Momentum to Fix Some Feds’ Retirement, and More

A weekly roundup of pay and benefits news.

Organizations representing federal employees and retirees are hopeful that a controversial tax rule that limits the Social Security benefits of former feds who have spent time in the private sector could soon be a thing of the past, thanks to two bills making their way through Congress.

The windfall elimination provision reduces the Social Security benefits of retired federal, state and local government employees who worked in private sector jobs in addition to a government job where Social Security is not intended as an element of their retirement income, like employees in the Civil Service Retirement System.

Two different proposals under consideration on Capitol Hill seek to ensure retirees affected by the windfall elimination provision receive the Social Security benefits they invested in. The Public Servants Protection and Fairness Act would introduce an alternate “public servant protection” formula to calculate Social Security benefits for those who retire beginning in 2022 and would be affected by the windfall elimination provision. Retirees would receive the greater amount of Social Security benefits from the two formulas, and those who have already retired, and are ineligible for the new formula under the bill, would receive $150 cash payments each month.

Although that proposal has more support in Congress, the solution preferred by federal retiree groups is the Social Security Fairness Act, introduced earlier this year by Reps. Rodney Davis, R-Ill., and Abigail Spanberger, D-Va., which would eliminate the windfall elimination provision altogether.

Access to Insurance Changes During Shutdowns

The Office of Personnel Management last week finalized new rules stemming from the 2020 National Defense Authorization Act ensuring that federal employees maintain access to their health insurance and can make certain enrollment changes during government shutdowns.

The rules, first proposed last July, establish that federal employees across the federal government who are responsible for administering the Federal Employee Health Benefits Program and the Federal Employee Group Life Insurance Program will be deemed “essential employees” who continue to work during a lapse in appropriations.

During the 2018-2019 35-day partial government shutdown, federal employees who encountered major life events like getting married or the birth or adoption of a child found they were unable to update their FEHBP plan to cover their new family member, since their agencies’ HR personnel were furloughed.

Additionally, the rule guarantees that, during prolonged shutdowns, workers will not be at risk of losing their coverage under the federal government’s dental, vision and long-term care insurance programs. Previously, if a lapse in appropriations lasted longer than two consecutive pay periods, federal employees would receive a bill in the mail from their Federal Employee Dental and Vision Insurance Program and Federal Long Term Care Insurance Program providers. If the employee did not pay the premium out of pocket, their coverage would lapse.

Under the new rule, FEDVIP and FLTCIP premiums would continue to be paid by the government for the duration of a government shutdown, with the employees’ portion taken out of their first paycheck after agencies reopen.